The idea of revenge spending is an inseparable part of human nature. After going through a difficult time or having a bad experience, it is natural to feel that we deserve to receive some sort of compensation to make up for it. While this is okay to some extent, it can quickly spiral out of control and make it difficult to avoid falling into the trap of revenge spending.
Making sure to understand revenge spending will help you to recognize when you are guilty of committing it. Ultimately, by doing so, you will be able to put measures in place to prevent yourself from falling into this trap, finding yourself in debt and even more unhappy than you were before.
What is Revenge Spending?
Revenge spending is based on the simple premise that we should treat ourselves to a reward after a bad experience. The idea itself makes perfect sense, and actually, there are plenty of reasons to encourage this practice, in part.
Perhaps that big meeting you had been preparing for months did not go well, you did not receive that well-deserved promotion, or your boss just dumped a huge assignment on you. In a similar fashion, maybe you are going through a difficult time socially, or perhaps you experienced a bad break-up.
The notion that you should be nice to yourself–and do things that make you happy–has an enormous amount of merit. You should treat yourself well in order to make yourself feel better about your current state of affairs.
Where things get tricky, however, is when a one-time splurge explodes your budget, or even more worrisome, if it starts to turn into a pattern of behavior. Individuals can quickly find themselves in a destructive habit of spending themselves into debt.
How to Avoid Revenge Spending
Acknowledging the problem, as the saying goes, is generally the first step on the path to recovery.
If your first impulse when the chips are down is to reach for your wallet, chances are that you may have a tendency to fall into the trap of revenge spending. Consumption in and of itself is rarely the answer, and like any addictive behavior, once the buzz wears off, there is often regret and self-loathing.
Knowing yourself and your inclinations is an important part of becoming a financially responsible adult. Asking yourself the reason behind any purchase will help you understand if it is an impulse buy, or whether it is something that you truly desire.
There are a number of techniques or strategies that people can employ to prevent themselves from making unnecessary purchases. Similar to not going to the grocery store when hungry, these mechanisms exist to help you overcome unhealthy urges during moments of weakness.
For instance, depending on the size of the purchase, some individuals will institute a “cooling off” period. For purchases over $100, for example, they may have a rule of waiting at least 24 hours before clicking the “buy” button. You can tailor this to best suit your tendencies and your budget, raising or lowering both the monetary and time thresholds.
However, the best way to prevent impulse buys and practice financial discipline over the long term is by adhering to a budget.
The Importance of Budgeting
Budgets are often viewed as constraints that are designed to prevent you from obtaining objects of desire. For many, budgets have a negative context, serving as a constant reminder of what they are unable to do, purchase, or enjoy.
However, budgets can be thought of as an enabler, helping to guide you towards a better allocation of your funds to achieve your ultimate goals. A budget can help you schedule your finances, helping you clearly understand the trade-offs between present-day consumption and long-term objectives.
For instance, if you want to save up for a dream vacation, a budget can help you build a roadmap for which expenses you will cut back on today in order to create the pot of money needed to purchase those plane tickets next year. The same principle holds true for any savings objective, be it for a down payment on a house, education, or retirement down the road.
The 50-30-20 budgeting rule is a popular framework whereby you will spend 50% of your after-tax income on needs, 30% on wants, and 20% on expenses. The 50-30-20 rule offers a simple and straightforward platform to organize your finances. It also provides room for fun, non-essential purchases, as long as they fit within your budgeting resources.
Conclusion: Setting Strong Financial Habits
There is a reason why retail therapy and comfort foods are well-known terms. We should be able to treat ourselves to the nicer things in life, especially when we are feeling down.
This can be following a personal event or a collective one, such as the COVID-19 pandemic, which forced all of us into a period of inactivity and isolation.
That being said, moderation is the key to making sure that you do not go overboard with any feel-good purchases. Living your life according to a budgetary framework will help you avoid the temptations of revenge spending, allowing you to keep your finances safe and sound even when times get rough.
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